Cash balance fund

[renrag40]

Yes, I'm putting in £33 per week at the moment and our beloved employer is putting in £77 per week. This is what has created the great "rate of return" I've received on my contributions and is precisely why leaving the scheme or claiming it early while Royal Mail are still contributing to it each week is financial folly.
The issue of the tax implications given how big the fund has grown to are valid...... more so for people in Section B than people in Section C.

[milly]

What does the cash balance fund invest in exactly, which funds etc, do we know ?

The RMPP has about 50 different fund managers working for them, investing the money held in the pension and the DBCBS.

There's no info in the report and accounts on exactly where the DBCBS is invested, but it does show the asset classes it uses, aswell as the percentage in each.

I'm not sure when 2023's R & A's will be released, but here's the link to last years: https://www.royalmailpensionplan.co.uk/ ... -Final.pdf

Can't say fairer than that. Looks like an absolute monster of diversification.

Looks to be heavily invested into various types of debt from what I can see.
Glad I'm not in it.

I estimate that since April 2018 until the end of March next year I will have contributed around £9,000 into the DBCBS....... it will have a value of just over £37,000 by then.
That to me is a mighty fine rate of return.
I'm glad I'm in it.

Yes I'm sure debt based investments are going to do very well in the future

[RobertT]

Yes, I'm putting in £33 per week at the moment and our beloved employer is putting in £77 per week. This is what has created the great "rate of return" I've received on my contributions and is precisely why leaving the scheme or claiming it early while Royal Mail are still contributing to it each week is financial folly.
The issue of the tax implications given how big the fund has grown to are valid...... more so for people in Section B than people in Section C.

Completely agree!

The basic rule of pensions is to always join your company scheme and pay in whatever it takes to get the maximum employer contribution. It forms part of your overall pay and benefits package and opting out is akin to taking a pay cut.

It's worth noting that members of the RMPP/DBCBS only pay in around 20% of the total contributions going in, with the remainder coming from RM and the taxman.
RMDCP members pay in 25%.
While those paying into a personal pension have to pay in 80%, and ISA's are 100%.

You don't need to be a mathematician to realise workplace pensions are great value for money, and that investments via other vehicles will have to work so much harder to compensate for the lack of 'free money'. Although those other vehicles may be more flexible.

[renrag40]

January the 12th and still no sign of the new scheme having a starting date....... can't see it starting before July now at the earliest ........ the main reason being that the present members will need to be given a fair bit of time..... at least 3 months notice....... to read the final prospectus for the new scheme and decide whether they want to be in it or not.
Plus members presently paying into various AVCs will need to be given time to put their affairs in order.

[heapsy]

Tbh I have a funny feeling that the CDC wont happen. I think that's the real reason we haven't heard anything.

[Wullie10]

What does the form of tax to be paid , take ? Automatically out of the lump sum or a large tax bill out of the blue years after all the money has been spent ? I can see people long retired, all of a sudden getting large demands for money they no longer have. It would be wise of course to keep some back for such cases.

[heapsy]

From the lump sum when you take it.

[renrag40]

What does the form of tax to be paid , take ? Automatically out of the lump sum or a large tax bill out of the blue years after all the money has been spent ? I can see people long retired, all of a sudden getting large demands for money they no longer have. It would be wise of course to keep some back for such cases.

Some of the cash balance fund is held back in case of tax implications when you take your nra 65 pension. For example, if the taxable part of the cash balance fund takes you from the 20% tax band and into the 40% tax band.

[buchanpeter]

Was told today from manager that the CDC scheme starts in October.
Everyone is being automatically transfered over to the new scheme.
Manager said if you want to opt out of the scheme then thats your choice.
I'm in the db scheme.
Has anyone found out if the lump sum being saved up from 2018 is getting thrown into that scheme?
Or is the CDC scheme starting from scratch with nothing in that pot?

I started in 2008.
Think i currently have 3 schemes.
RMSPS <-2010
RMPP <-2018
Cash balance. <-2024
Now CDC in october.

[RobertT]

Was told today from manager that the CDC scheme starts in October.
Everyone is being automatically transfered over to the new scheme.
Manager said if you want to opt out of the scheme then thats your choice.
I'm in the db scheme.
Has anyone found out if the lump sum being saved up from 2018 is getting thrown into that scheme?
Or is the CDC scheme starting from scratch with nothing in that pot?

I started in 2008.
Think i currently have 3 schemes.
RMSPS <-2010
RMPP <-2018
Cash balance. <-2024
Now CDC in october.

The start date for CDC/RMCPP is dependent on the last lot of legislation being in place. That was first planned for late last year, then it was May / June, but was delayed because of the general election. Time will tell when it actually gets done!

The DBCBS is part of the RMPP and payable with NRA65 benefits and that has been the case since day one in 2018.

Lots of info on the new scheme is here: https://www.myroyalmail.com/collective-plan

[posted]

apparently there's an update being shared next week so seems your manager knows something.

[RobertT]

When the cash offer for RM was accepted by the board at the end of May, it was announced the CDC/RMCPP would go ahead 'as soon as reasonably practicable, with hopes for the scheme to launch in October 2024.'

https://www.pensionsage.com/pa/EP-UK-bi ... tcable.php

[freespeech]

What does the form of tax to be paid , take ? Automatically out of the lump sum or a large tax bill out of the blue years after all the money has been spent ? I can see people long retired, all of a sudden getting large demands for money they no longer have. It would be wise of course to keep some back for such cases.

It's "income" and taxable in the usual way although likely to be at the 40% rate initially and then rebated if/when you don't reach the 40% threshold at year end.

[heapsy]

When the cash offer for RM was accepted by the board at the end of May, it was announced the CDC/RMCPP would go ahead 'as soon as reasonably practicable, with hopes for the scheme to launch in October 2024.'

https://www.pensionsage.com/pa/EP-UK-bi ... tcable.php

Am I right in thinking there's quite a break in parliamentary proceedings until about October? If so, I can't see it happening to April.

[RobertT]

When the cash offer for RM was accepted by the board at the end of May, it was announced the CDC/RMCPP would go ahead 'as soon as reasonably practicable, with hopes for the scheme to launch in October 2024.'

https://www.pensionsage.com/pa/EP-UK-bi ... tcable.php

Am I right in thinking there's quite a break in parliamentary proceedings until about October? If so, I can't see it happening to April.

I'm no expert on the law, but my understanding is the legislation that will enable the CDC scheme to start is secondary, which is written by ministers and involves putting the meat on the bones of the primary legislation which is already in place.
Once its been published, MP's then have 40 days to challenge it. If nobody does, it becomes law.

I read somewhere online it was due in May/June but has been postponed due to the election. If RM/CWU are saying October, then perhaps there's a window of opportunity for it to go through?
But then again, there's already been a few false dawns, so who knows?